1. Field of the Invention
This invention relates to method of conducting business, and specifically to a method for processing payments obtained from diverse sources. In particular, it relates to a method and system for processing child support payments made by individuals or employers on behalf of individuals to a governmental or private entity for the purpose of satisfying child support obligations. The invention also encompasses a payment processing system which can be used by commercial entities to process payments received from multiple sources, and is specifically adapted to process child support payments made by individuals and employers on behalf of individuals to a central clearing organization which records and parses the payments, and sends out further payments that are made to custodial persons.
2. Prior Art
In 1975 Congress established the Child Support Enforcement Program with the passage of Title IV-D of the Social Security Act. There have been modifications made to the program over the years. As part of the Personal Responsibility and Work Opportunity Act of 1996, states were required to set up centralized payment processing sites, known as State Disbursement Units (SDUs), for the collection of child support payments. States are now required to receive support payments electronically and to disburse payments to custodial parents within two days of receipt. For large states this can amount to tens of thousands of payments per day. The payments come from individuals, and from employers who have withheld money from the employee's paycheck to satisfy the support obligations.
Private organizations have established business centers for the sole purpose of processing such payments on behalf of the states, and other interested parties. The private organizations have also developed systems for processing such payments, keeping track of amounts paid, and owed, and preparing checks or electronic payments for deposit at appropriate locations, whether it be to banks, or sent to individuals directly.
Almost without exception, up to now, the systems developed by the private organizations have been manually driven operations, and are susceptible to error. That is, while various machines and integrated software programs are used to process the checks, at some point human intervention is required which presents the usual opportunity for human errors to be made which render the payment data inaccurate to some degree. It has been estimated that up to 40% of child support payments made at the present time have errors of one sort or another that require human intervention to correct.
The present invention is a method and system for processing payments. It is specifically adapted to processing child support payments. The method and system substantially eliminates the need for human intervention, and renders the whole method of processing payments automatic from start to finish, thereby significantly decreasing the number of errors, and making the entire process more efficient than has heretofore been the case. The mechanism by which this is accomplished is the payment processing system of this invention. Thus, the invention is a method of processing support payments, and the system with which this is accomplished. The method and system described herein, applicable to child support payments, can also be used to process payments made for other purposes, such as catalog purchases, etc.